MK 303: Global Marketing – Flashcards

development and selling of products or services intended for the global market, but adapted for to suit local culture/behavior (think globally, act locally)

recognizing similarities between international markets and integrating them into the overall global strategy

responding to each market's needs and wants

removal of trade barriers, global customers, relationship management and networks, standardized worldwide technology, worldwide markets, global village and cultural homogenization, worldwide communication, global cost drivers

cultural differences, regionalism/protectionism, deglobalization trend

occurs when the firm expands its business activities into international markets

profit ; growth goals managerial urge tech competence foreign market opportunity economies of scale tax ; other benefits

Competitive Pressures Domestic Markets - small and saturated Overproduction Unsolicited foreign offers Extend sales of seasonal products proximity to international customers

general market risks commercial risks political risks insufficient knowledge lack of foreign connections lack of capital cost escalation lack of production lack of foreign distribution emphasis on domestic markets

Stage 1: No regular export activities (sporadic export) Stage 2: Export via independent reps (export modes) Stage 3: Establishment of a foreign sales subsidiary Stage 4: Foreign Production

a firm that globalizes rapidly, without any preceding long-term internationalization period, SMEs, annual sales less than 100 million, rely on technology, run by visionaries

1. Macro Level - analysis of national competition 2. Meso Level - competition analysis in an industry 3. Micro Level - value chain, competitive triangles

1. Threat of new entrants 2. Bargaining power of buyers 3. Threat of substitutes 4. Bargaining power of suppliers 5. Competition rivalry within industry Explains forces companies need to be wary of

trade laws that favor local firms and discriminate against foreign ones Non-tariff: more elusive and disguised, recent increase - quotas (increase competition and protect domestic), embargoes (complete ban on trade), administrative delays (red tape and bureaucracy), local content requirements Tariffs: tools used by government to protect local companies from outside competition, direct taxes on imports - most common types are specific (based on weight or volume), ad valorem (% of the total value of goods), discriminatory (from a particular country)

Glocalisation: having a global product, but altering the promotion to be in accordance with the local culture and behaviors. THINK GLOBALLY, ACT LOCALLY. removal of trade barriers, global customers, relationship management and networks, standardized worldwide technology, worldwide markets, global village and cultural homogenization, worldwide communication, global cost drivers

Analysis of national competitiveness Characteristics of a home national play a significant role in a firm's international success Factor conditions: human resources, natural resources, capital, technology, and entrepreneurship Supporting industries: suppliers, competitors, and complementary firms Customer Demands Firm strategy, structure, and rivalry: domestic rivalry level Government roles and national industrial policy: tax incentives, education system, national infrastructure, legal and regulatory systems Chance can also play a role

Analysis in an Industry Porter's 5 Forces: threat of new entrants, bargaining power of buyers, threat of substitutes, bargaining powers of suppliers, competition rivalry within an industry competitive rivalry: concentration of industry, rate of market growth, structure of costs, degree of differentiation, exit barriers, and switching costs High supplier power: supply is dominated by few companies, products are unique, credible threat of integrating forward into industry's business, buyers do not threaten to integrate back into supply, market is not important to the supplier group High buyer power: buyer are concentrated, pose credible threat of integrating back yo manufacturer, products are standard/undifferentiated, many suppliers, product is unimportant but price is important Substitutes: buyers willingness to sub, relative cost and performance of subs, cost of switching to subs New entrants: economies of sales, capital requirements, production differentiation and brand identity, switching costs are high, access to distribution channels

Value Chain Competitive Triangle: customer - firm - competitor Perceived value (what the customer will get): The customer's overall evaluation of the product/service offered a firm. Relative cost (what the customer will give): the direct and indirect costs associated with getting a particular product or service. The firm related costs in creating the perceived value Customer. Perceived. Value. = Get/Give = Product benefits + service benefits/product costs + indirect costs Sources of Competitive Advantage: Value creation depends on the firm's resources and competences: Resources: inputs: financial, technological, human and organisational resources - found in the firm's different departments. Competences: The way various resources are used, created and combined Core competences: Value chain activities in which the firm is better than its competitors. Competitive Benchmarking: Technique for assessing relative market performance compared with main competitors. Market share is an 'after the event' measure Companies should pursue 'share of mind' Hence we need to utilize continuing indicators of competitive performance to highlight areas where improvements in the marketing mix can be made.

Culture is the collective programming of the mind which distinguishes the members of one human group from another. Elements of culture: language, customs, manners, education, technology, social institutions, values, aesthetic, religion Ex. Scotch Whiskey - Italy (man w a woman on his arm) but in Japan (a collectivist country) this would be inappropriate

High-Context Culture: emphasize nonverbal or indirect language. Communication aims to promote smooth, harmonious relationships. Such cultures prefer a polite, "face-saving" style that emphasizes a mutual sense of care and respect for others. Care is taken not to embarrass or offend others. Ex. Asian countries Low-Context Culture: rely on explicit explanations, with emphasis on spoken words. Such cultures emphasize clear, efficient, logical delivery of verbal messages. Communication is direct. Agreements are concluded with specific, legal contracts. Ex. Western Europe, The USA

Individualism vs Collectivism High Power vs. Low Power Distance: HP have larger gaps between the powerful and the poor. Hierarchy organizational structure - autocracy. Example, Philippines LP have smaller gaps. This is normally a flat organizational structure. Example, Scandinavia High vs Low Uncertainty Avoidance: HUA try to minimize risk (examples: Belgium, France, Japan). LUA firms make quick decisions, take chances, and people are comfortable changing jobs (examples: Ireland, India, USA) Masculinity (ambition, power, success, care about making money) vs Femininity (good welfare systems, caring for all people): Example of masc. is Australia. Example of fem. is Scandinavia. Long-Term vs Short-Term Orientation: LTO emphasizes the long view in planning and living, focusing on years and decades. Examples are traditional Asian cultures. STO is most western countries

Step 1: Selection of the relevant segmentation criteria (measurability, accessibility, profitability, actionability) Step 2: Development of the appropriate segments. General characteristics of a country (think culture) have high levels of the above criteria. Specific characteristics (think personality, attitudes, tastes, etc) have low levels of the above criteria. Step 3: Screening of segments to narrow down the list of markets/countries. Choice of target markets/countries. Preliminary screening: Using coarse - grained, macro orientated methods to assess a market (Political stability, Legal and regulatory framework, Export and FDI policies GDP, Economic growth). Fine-grained screening: Attempt to match market opportiunities to firm's strengths. Market attractiveness is assessed alongside competitive strength. Categories of markets: A countries: primary markets offering the best opportunities for long-term strategic development. B countries: secondary markets where opportunities are there but risk is high. C countries: tertiary markets with high risk Step 4: Microsegmentation: develop segments in each qualified country or across countries. Demographics, lifestyles/psychographics, consumer motivations, buyer behavior

Indirect exporting means selling to an intermediary, who in turn sells your products either directly to customers or to importing wholesalers.

Direct exporting is the sale of goods directly from a company to potential customers without the use of an intermediary such as a retail store. With this method, the company is responsible for all parts of the selling process, from market research to distribution logistics.

Licensing refers to the exchange of rights, such as manufacturing rights, to another in exchange for payment. More value chain functions are transferred to partners: the licensees Patent covering a product or process Manufacturing know-how not subject to a patent Technical advice and assistance Marketing advice and assistance Use of a trade mark/trade name

Franchising refers to the exchange of rights between a franchisor and franchisee, such as the right to use a total business concept including use of trade marks, against some agreed royalty. Product and Trade Name Franchising: Similar to trademark licensing- distribution system where suppliers make contracts with dealers to buy or sell products. Ex. Coca-Cola Business Format Package Franchising: The franchisor transfers a business package to the franchisee. The franchisor also provides management assistance, in return the franchisor gets an initial fee and/or continuing fees (% of turnover). It is an on-going relationship and combines economies of scale and local knowledge and entrepreneurship. Build-a-Bear Indirect Franchising: Master franchiser in US, then to Germany which goes into Germany, Austria, and Switzerland

A joint venture or strategic alliance is a partnership between two or more organizations, based in different countries. A joint venture is when two or more firms join together to create a new business entity that is legally separate and different from its parent firms. A strategic alliance is a non-equity (contractual) joint venture. Reasons to use joint-ventures: Complementary technology or management skills can lead to new opportunities Firms with partners in host countries can increase speed of market entry Less developed countries may restrict foreign ownership Costs of global operations in R&D and production can be shared

Subsidiaries are daughters (Fox News), owned by a parent company (21st Century Fox). Parent company owns shares within the subsidiary; these shares allow the parent company to keep control of the subsidiary, even though it is technically its own company Three UK is owned by Hutchinson Whampoa in Hong Kong

Take product or promotion and straight extension - just send it into foreign market; no change...just translated Keep product same (change language) - but you adapt to local audiences, different promotions Keep the promotion the same, but change the product Dual adaptation: both product and promotion are changed depending on the foreign market Straight Extension Promotion Adaptation Product Adaptation Dual Adaptation Product Invention

1. economic environment (DEMAND: what products are consider essential? what prices are customers able and willing to pay?/ SUPPLY: cost of raw materials, labor, energy, and other resources a firm needs to purchase or hire) 2. legal environment (government laws and regulations, e.g. price controls to protect local producers from international competition that is deemed unfair, compliance with different technical specifications; health and safety standards; environmental protection acts etc.) 3. distribution infrastructure (the number, type, competencies, costs, and margins of the intermediaries, sales and credit terms and discounts offered). 4. customer characteristics and behavior (Price level is among the most important criteria used by customers in evaluating competing products ) 5. stage of Product Life Cycle.

CORE product is NOT the tangible physical product. You can't touch it. That's because the core product is the BENEFIT of the product that makes it valuable to you. (With a car, the core product is convenience) ACTUAL product is the tangible, physical product. You can get some use out of it. (With a car, the actual product is the car). AUGMENTED product is the non-physical part of the product. It usually consists of lots of added value, for which you may or may not pay a premium. (With a car, the augmented product would be something like the customer service given by a specific brand).

External Forces: customer characteristics, nature of the product, nature of demand (location), competitions, legal regulations/local business practices Internal Major Decisions 1. decisions concerning the structure of the channel types of intermediaries (other distributors) coverage length control resources degree of integration 2. managing and controlling distribution channels screening and selecting intermediaries contracting motivating controlling termination Vertical integration means seeking control of channel members at different levels of the channel. Horizontal integration means seeking control of channel members at the same level of the channel (i.e. competitors).

Global standardization is the ability to use standard marketing internationally. In other words, it's the ability for a company or business to use the same marketing strategy from one country to the next, and across various cultures. When a product has basically the same appeal all over the world, global standardization is a useful tool. Pros: Cost and Branding Cons: Sensibility Adaptation is the process of modifying an existing product so it is suitable for different customers or markets. An adaptation strategy is particularly important for companies that export their products because it ensures that the product meets local cultural and regulatory requirements